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Smaller Power Plant Approved

The California Energy Commission approved a license July 30, 2015, to construct a new, smaller and more efficient power plant to replace the aging Encina Power Station on Carlsbad’s coast. The license granted to NRG Energy is the final approval in the process for the new power plant.

NRG Energy originally proposed the Carlsbad Energy Center Project in September 2007. The original proposal did not include a commitment to tear down the existing plant, leaving open the possibility of two power plants on Carlsbad’s coast for the foreseeable future. At that time, NRG did not have a contract to sell the power locally. The City of Carlsbad strongly opposed the project for these reasons, and a lengthy review process ensued. Ultimately, the California Energy Commission approved the project on May 31, 2012.

During the five year approval process, newer technology became available, and the unexpected closure of the San Onofre Nuclear Generating Station changed the region’s energy needs. As a result, in December 2013, SDG&E, NRG Energy and the City of Carlsbad entered into negotiations that would allow for the construction of an amended Carlsbad Energy Center Project.

In January of 2014, the Carlsbad City Council approved an agreement with NRG and SDG&E under which NRG would build a more environmentally friendly, lower profile power plant that would run only during periods of peak demand. The agreement also includes a guarantee that NRG will completely decommission, demolish and remediate the old Encina Power Station site at no cost to taxpayers and begin the process to redevelop the site, once the new power plant is in operation. This guarantee was included as a condition of the California Energy Commission’s approval.

To support the City of Carlsbad’s goal of returning its coastal land to non-industrial uses, the agreement calls for SDG&E to relocate its operations yard (“North Coast Service Center”), currently located adjacent to Cannon Park. NRG agreed to pay for the relocation, pending regulatory approval. SDG&E will then transfer ownership of the existing property to the city. If it is not possible to relocate the service center, NRG will pay the city $10 million.

“The CEC approval of the Carlsbad Energy Center is an important milestone in helping achieve local, regional, and state goals,” said John Chillemi, president of NRG Energy’s West region. “Moving one step closer to construction of a lower profile, more environmentally beneficial plant also supports the city’s goals of removing the older, larger Encina plant, and redeveloping the beach front site. The new project’s fast start technology will help ensure regional reliability as it enables greater renewable integration into the California grid, which additionally helps advance California’s goals to reduce its statewide carbon footprint.”

NRG Energy filed an application for the Amended Carlsbad Energy Center Project with the Energy Commission in April 2014, and the commission held a number of public meetings, including a hearing in Carlsbad in April 2015. The California Public Utilities Commission approved the SDG&E “power purchase and tolling” agreement with the Carlsbad Energy Center in May 2015. That decision has been appealed and is under review.

The California Energy Commission is responsible for approving power plants in California. The California Public Utilities Commission is responsible for approving power purchase agreements between the state’s private electric utilities and independent power generators.

“This project will help ensure a reliable energy supply for our region while freeing up precious coastal land for the benefit of the public,” said Assistant City Manager Gary Barberio, who is overseeing the issue for the city. “We look forward to working with NRG and the public to develop a plan that supports our community’s vision for the future of their coastline.”

The City of Carlsbad has long been in favor of removing the old plant, which has far greater visual, air quality and other environmental impacts than the small, cleaner and more efficient peaker style plant that the state energy commission has approved. Under state law, the old plant must stop operating by the end of 2017 because it uses ocean water for cooling, something that is no longer allowed. The new plant would be farther east on the site and recessed into a basin where old storage tanks are currently located.

Once the project’s licenses and related approvals can no longer be appealed, NRG can proceed with the construction process. The new plant could be completed as early as November 2017, and the old plant could be torn down within three years after it stops operating.

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